Indonesia may terminate Singapore gas contract midyear

May 9, 2007
Singapore Democrats

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Ika Krismantari
The Jakarta Post, Jakarta
08 May 07
http://www.thejakartapost.com/detailbusiness.asp?fileid=20070508.L03&irec=2

Indonesia, the world’s second largest gas exporter, may terminate a gas export contract with a Singaporean company midyear should it fail to comply with conditions precedent set out in the contract, a government official says.

The government is currently reviewing the gas-export contract with Island Power (IP), as it has failed to secure a pipeline connection with another Singaporean company, Gas Supply Pte. Ltd. (GSPL), a subsidiary of Temasek Holdings.

IP has yet to seal a deal for the utilization of a 12-kilometer-long pipeline that belongs to GSPL, which is demanding payment for the use of the pipeline, which links up with Perusahaan Gas Negara (PGN)’s 470-kilometer-long pipeline network linking Indonesia and Singapore.

Eddy Purwanto, Upstream Oil and Gas Executive Agency (BP Migas) deputy chairman for marketing and finance, said Monday the government had sent a notification to IP in connection with the pipeline issue, which is one of the requirements already stated in the contract for it to go ahead.

“If they still can’t afford to comply with the CP (condition precedent), (the contract) will be terminated. We have set them a deadline of before midyear,” Eddy said.

Under the agreement between the government and IP, Indonesia is to deliver 110 million standard cubic feet per day (mmscfd) of gas over a period of 13 years to IP through a gas pipeline up until 2014.

The 470-kilometer pipeline transmits the gas from ConocoPhillips’ gas field in Grissik, South Sumatra, through Batam.

In addition to Conoco’s Grissik field, Singapore receives gas from Conoco and its partners’ fields in Natuna.

Like Singapore, Malaysia also has a contract for the supply of gas from the Natuna field. This contract runs for 20 years up until 2020.